Stamp duty 3% rate: Homes, HMRC and hold ups

Please hold

It will perhaps not come as too much of a surprise to anyone who’s ever had dealings with HMRC to learn that the UK’s tax system is complicated.

That’s not just the case for individuals whose direct involvement with the Revenue is relatively occasional, such as the filing of an annual self-assessment.

In December last year, the House of Commons’ Public Accounts Committee warned that HMRC’s customer services were at risk of another “catastrophic collapse” and consequent inconvenience for taxpayers.

The New Year brought no change in fortunes for the Revenue’s reputation. Only a matter of weeks after being given a kicking by politicians, it was the turn of the body which represents chartered accountants across England and Wales to voice its concerns.

The Institute of Chartered Accountants in England and Wales (ICAEW) surveyed its members and found that more than half didn’t trust HMRC to “get it right first time”.

Interestingly, the same piece of research concluded that a similar proportion felt that complex tax queries were not being resolved satisfactorily by ‘phone.

You might have thought that, under pressure and under parliamentary scrutiny, the taxman would be eager to pull his socks up. Not so, it seems.

Stamp duty 3% rate – still holding on

Fast forward to this week and news reports claiming that some homebuyers are being forced to wait two months for HMRC guidance about Stamp Duty – or SDLT.

Purchasers not only have the headache, it seems, of waiting for advice. In many cases, the guidance is confusing. One woman told the Daily Telegraph that she’d received three separate and contradictory pieces of advice in three different ‘phone calls.

Regular readers of this ‘blog will appreciate that SDLT is, sadly, a theme which crops up more often than one might imagine that it should.

However, I think that it is a frequent source of irritation because it has indeed become more complicated due to successive rule changes by HMRC designed to squeeze more cash from the pockets of those buying their first or even second homes.

In April, it was revealed that the Revenue had recouped almost £12 billion in SDLT over the course of the previous 12 months alone.

Take just one part of the entire SDLT system by way of an example.

From April last year, HMRC required people fortunate enough to afford a second home to cough up an additional rate or surcharge of three per cent on top of the normal SDLT rates – often referred to as the stamp duty 3% rate.

On face of it, it might seem a fairly straightforward change but that single change was covered by more than 60 paragraphs and 30 or so examples in the guidance note provided by HMRC.

The stamp duty 3% rate can throw up some pretty mind bending results.

For instance, one might trigger the surcharge merely because the order of particular events.

You might be deemed to own a dwelling you don’t……and deemed not to own a dwelling you do.

Special rules apply for ‘linked transactions’ which most people are unaware ……and onerous calculations for those that are.

If one buys six or more residential properties then this might be transmogrified in to a commercial transaction…

…and so on.

It is not surprising, therefore, that people find themselves tied up in knots and not buying houses after all but remaining a part of ‘Generation Rent’.

That feeds something which I remarked upon in July; namely, SDLT negatively affecting the residential property market.

Delays of any sort can badly impact on people’s lives and are unforgiveable.

When hold-up is compounded by errors caused by how intricate the rules are, the need for simplification – to help homebuyers, conveyancers who submit the SDLT returns and HMRC itself – becomes more urgent.

If you have any queries about the stamp duty 3% rate or property tax in general then please get in touch

By | 2017-10-18T22:43:00+00:00 18 October 2017|Andy Wood, blog, HMRC, property tax, tax planning, Tax policy|

About the Author:

Founder & Technical Director, Andy is a practical, creative tax adviser with a very broad tax knowledge. He is regularly quoted in the media as an expert on topical tax issues.

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